Talks on a new European Union budget have collapsed as David Cameron accused
Brussels of 'living in a parallel universe' and said there could not be a
'deal at any cost.'

Talks on a new European Union budget have collapsed after David Cameron won German support in a row with France about his demands for more cuts in spending.

The Prime Minister accused Brussels of 'living in a parallel universe' and said there could not be a 'deal at any cost.'

Speaking at the end of the failed summit Mr Cameron said: "We're not going to be tough on budgets at home just to come here and sign up to an increase.

"Frankly the deal on the table was just not good enough. It wasn't good enough for Britain and neither was it good enough for a number of countries.

"In the UK we are cutting admin budgets by as much as a third, civil service staff by 10 per cent in two years. None of this has been easy. Meanwhile Brussels continues to exist as if it is in a parallel universe."

The Prime Minister blamed the European Commission for the break-down, accusing the commission of “insulting” taxpayers by refusing to accept cuts in its budget or make reductions in staff pay or perks.

Mr Cameron strongly criticised the commission and its president, Jose Manuel Barroso, accusing them of refusing all moves to cut administrative spending

“The EU institutions simply have got to adjust to the real world,” the Prime Minister said. “The commission did not offer a single euro in savings, not one euro – insulting to European taxpayers. I do not think that is good enough.”

Mr Cameron complained that 200 staff earned more than he did. He called for a 10 per cent cut to the overall pay bill in Brussels.

"The EU institution has got to adjust to the real world. There cannot be a deal at any cost. The British people would expect us to fight hard for the best deal for them and that is what I will continue to do."

The Prime Minister was accused of “blackmailing” other European Union leaders as talks on the EU budget broke up.

The EU summit in Brussels ended without a deal, forcing EU leaders to plan new talks on the budget for the seven years from 2014.

The summit was effectively deadlocked by a dispute between net contributors to the budget – including Britain and Germany – and those who get more from the EU than they pay into it.

France, a net contributor, had also opposed cuts in the Common Agricultural Policy of farm subsidies, and pushed for cuts in the British rebate.

But fatally for the French position, Germany’s Angela Merkel refused to back President Francois Hollande, instead siding with Mr Cameron over the need to make cuts in EU bureaucracy.

Amid continued divisions between the big European powers, Herman van Rompuy, the EU president, abandoned talks on the second afternoon of the summit.

Mr Cameron had demanded deep cuts in the EU’s administrative budget, calling for European Commission officials to lose billions of pounds worth of generous perks.

However, Mr van Rompuy’s latest proposed budget would still have increased spending on administration.

British sources expressed irritation that Jose Manuel Barroso, the Commission president, had strongly opposed any cuts in his budget. They also criticised Mr van Rumpoy for letting Mr Barroso sit in on his meetings with leaders to discuss the budget plans.

Mr Cameron’s insistence on cuts was criticised by senior members of the European Parliament.

Hannes Swoboda, the president of the Socialists and Democrats group in the European Parliament, said the summit had been “disastrous” and blamed Mr Cameron

"Regarding the additional cuts, it is unacceptable that the majority of member countries are letting themselves be blackmailed by David Cameron who is permanently threatening to block progress in the EU,” he said.

"The British prime minister, who is considering leading the UK out of the EU, is having more impact on the future of the EU than those who are committed to strengthening the EU and fulfilling their obligations."

Guy Verhofstadt, a Liberal MEP and former Belgian prime minister, also attacked Mr Cameron over his negotiating tactics.